Just the facts: Moore explains hospitality tax question

By Franklin Moore

Wednesday, June 12, 2013

• Hospitality Tax: The factsI firmly believe that you cannot make an informed and educated decision unless you understand the history and facts. Information and rumors are circulating about a 2 percent hospitality tax that Goose Creek City Council is discussing.Some are true, most are not.As a resident, you deserve to be informed and deserve the respect of having your voice heard.• State LawState law allows municipalities to impose up to a 2 percent hospitality sales tax, and counties can impose up to a 1 percent hospitality sales tax. The combined City and County hospitality tax cannot exceed 2 percent.The thought behind a hospitality tax is that transient customers (visitors) and residents will pay a tax on prepared foods and beverages. The name “hospitality” tax was likely given because it is paid by both residents and visitors (in lieu of property taxes on residents only) and is meant to benefit both. By law, the revenue has to be spent on recreation and/or tourism. The tax is paid by the consumer, not the business.• StatusGoose Creek City Council is considering a 2 percent hospitality sales tax on prepared food and beverages. The tax will generate approximately $1 million per year.At the May 14 Goose Creek City Council meeting, the issue was discussed and tabled because several council members requested more time to research the impacts and ponder potential projects.• ProjectsA preliminary list of projects was developed as a starting point for upcoming conversations. At a future City Council workshop, this list will be discussed and revised per input from both Council members and Residents. The list includes Phase 2 of the Community Center located beside City Hall (to replace the aging Casey Community Center); an amphitheater for concerts and performances; parks/ green space; repairs/improvements at the city-owned Crowfield Golf Course.• ComparisonProvided is a comparison of taxes collected on prepared food and beverages for the area. Except for Goose Creek, all listed municipalities have 6 percent state tax, 2 percent hospitality tax, plus county taxes. Goose Creek tax includes 6 percent state tax and 2 percent county tax.)Charleston: 12.5 percentSummerville: 12 percentNorth Charleston: 11.5 percentMount Pleasant: 10.5 percentMoncks Corner: 10 percentGoose Creek: 8 percent (10 percent if Hospitality Tax passes)

• Debt FreeThe City of Goose Creek is debt free as of 2012. Many people have commented “if the debt is paid off, use the money you were paying the debt off with for other projects.”That sounds logical but it isn’t that simple. Fifteen years ago, the city created a Tax Increment Financing district (TIF) which also ended in 2012. A TIF Basically “freezes” taxable property values for other governments and any increase in taxes (generated by an increase in property values) goes to the city.The thought of this common financing method is to borrow money to invest in blighted areas with the assumption that the investment will increase property values (and thus increase tax revenue) to pay off the debt. Now that the TIF has ended, the additional source of revenue ended as well (the money that was being used to pay off debt). The remainder of the budget is balanced with little to spare.• SummaryClear as mud? Short answer: The city has a balanced budget. There is little extra money. There are two options for city residents in this post TIF era. The first option is to maintain the status quo; everything stays exactly as is. The second option is to continue improving the city, which requires funding.The three options for funding are: an Accommodations Tax (negligible amount of money); a Property Tax Increase (paid by residents and property owners only); a Hospitality Tax (paid by visitors and residents in Goose Creek).I’m not making the case for or against nor am I providing my opinion. You deserve a non-biased, non-political explanation of the facts so that you may make your own informed decision.Do we want to maintain the Status Quo or do we want Improvements in the city? Tax or no tax? Let your voice be heard and let your City Council members know!

Mr. Moore is a member of Goose Creek City Council.

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